1. Field of the Invention
The present invention relates to an educational tuition securities system, wherein securities are issued by an educational institution, can be freely traded on an exchange, and can be redeemed for payment of fees at the educational institution.
2. Related Art
The ability to pay for the college education of a child is a significant concern for most parents. Tuition costs for college education continue to increase on a yearly basis at public and private institutions, including costs for room and board. In many instances, parents begin saving for a child's future college tuition when the child is at a young age.
Even though parents may be able to save money for a child's education, quite frequently, the amount saved is insufficient to pay for the entire cost of a child's college education. Further, funds for college education can be saved in low interest-bearing accounts (e.g., savings, certificate of deposit, money market accounts, etc.) that preserve principal, but do not yield a high rate of return. Other funds are invested in brokerage accounts (e.g. 529 plans and Coverdell Education Savings Accounts, of which Coverdell Accounts have a maximum contribution of $2,000 per year depending on annual income). Such accounts may consist of stocks, bonds, mutual funds, etc., which places assets at higher risk because principal can be lost and asset value is linked to economic market conditions that may not return desired investment results. State-sponsored pre-paid tuition plans represent another investment vehicle for paying education costs, but such plans are not offered by all states. Further, in some states, plans are limited to public educational institutions within a given state and require state residency. Pre-paid tuition gifts allow family members to purchase tuition at a current price to be used in the future, but if the child does not attend or withdraws from the institution the funds remain with the institution.
Often times, relatives wish to contribute to future education costs by giving gifts of money at special occasions, such as birthdays, etc. This money, however, is seldom reserved by the receiver exclusively for education costs. Rather, it is put into general funds and used as needed or desired.
Moreover, although student loans may provide sufficient capital to pay for the remainder (if not the entirety) of higher education costs, many students are left at graduation with significant debt. This can be particularly burdensome on a recent college graduate, especially if the graduate is not able to immediately find work and/or desires to enroll in graduate school. Thus, in today's education market, students are faced with increasing debt loads and parents are not provided with a means for affording higher education for their children without putting themselves or their children in debt.
Educational institutions are very highly esteemed by the public. The value of education is always increasing, and the cost of education is always rising. Despite the good will and ever-increasing value, there is no known mechanism for investing in educational institutions.
Accordingly, what would be desirable, but has not yet been provided, is an educational tuition securities system, wherein tuition shares can be purchased for investment or for others, freely traded on an exchange, and redeemed for payment of education fees at a desired educational institution.